Unlimited Selling Pressure Takes Hold
Who keeps Pressing down the market? Orderflow says it's Bigger Forces behind the scenes
Hey Folks -
I haven’t sent out a public email in a while as I’ve been hyper focused on helping members navigate this period of volatility we’ve been seeing. I spend an extraordinary amount of time strategizing about the market environment, and I compact all of my thinking into a concise deliberate/actionable message every morning on WhatsApp.
First let me address some nuances that are coexisting in the market here.
If you’re making intraday decisions, this market environment actually may be rewarding given the large swings that create opportunity for instance in capturing moves in ES/NQ.
If you’re a longer-term investor or an intermediate-term investor in U.S. companies who tends to hold positions, this is a very unfavorable environment. No getting around it.
Generally speaking, my data sets suggest that the largest equity returns come from longer-term or at least intermediate-term timeframes. Because of that, my best ideas tend to come from point #2.
But we’re in a landscape that is, for now, only allowing point #1 to work.
Let me and share some Orderflow data (courtesy of Bookmap) on recent events that I believe explain what happened over the past 48 hours.
Look at the Orderflow yesterday (Pre-Liberation Announcement session 4/2).
It explains the large surge we saw ahead of the event and the liquidation after.
My observation is that there was a TON of aggressive market buying activity (Green Dots show above) in the morning of 4/2 for the Nasdaq-100 (NQ) ahead Trump’s speech.
Despite the indices already making a big move to recover a large pre-market loss on 4/2, I believed and shared that there was still room in the tank to move even higher based on my interpretation of the orderflow.
Turns out NQ went up another +300 points (19600 → 19900) afterwards before the close.
Well we know what happened last night with “Liberation Day”…we got something completely unexpected.
I retweeted the best interpretation of the Tariff numbers we saw presented at the event. See below.
So what happened to the large and aggressive Buyers from 4/2? My thinking is that they had to surrender, which caused the liquidation from last night to occur.
And I also believe they tried AGAIN today to defend the market at the Weekly Lows (see the Green Dots below today ) but ultimately failed - leading to a cascade of further selling this afternoon.
Now that Institutional Buyers have tried (and failed) to lift the market, coupled with the fact that we are now exploring price action beneath the weekly lows AND macro policy uncertainty is changing the Fundamentals of companies within the indices, I’d say the psychological chaos is real.
The next date to mark on our calendars is 4/9, which is when reciprocal tariffs will actually begin to take place.
Negotiations are (most likely) taking place in the background.
Until something concretely good hits as positive developments, I rate this market only suitable for Scalping or Super Long Term Investing (Set it and Really Forget It).
I am working hard every day to find great actionable ideas based on the rapidly changing landscape. I have to be very selective with any idea I share now. Very dangerous environment.
One thing is for sure: Things WILL get better.
With time.
-Larry
I’m thankful for the Great Resources that have partnered with me that offer our friends on my newsletter special pricing (Links below):
Bookmap (Orderflow shown above and the ability to see Stop Hunts and Icebergs) - Quarterly package specials offers
MenthorQ (Institutional Option Flows) - 20% off
TradeZella (Powerful Journaling Software for serious Traders)